Explained: Why Rule 31B is triggering fresh GST heat on online gaming firms
Brought in 2023 on the recommendation of the GST Council, Rule 31B of the CGST Rules states that in the case of online gaming, the “value of supply” shall be the amount paid or deposited with the gaming service provider. In simple terms, this means that tax should be calculated on the total amount a player pays or deposits to participate in a game — but it should not include winnings that are reused.
The Indian online gaming industry, already battling a retrospective demand for the 2017–2023 period, is now under fresh scrutiny from tax authorities. The GST department has started issuing new notices seeking tax on bonuses, cashbacks, and other promotional credits extended to users by gaming companies, according to reports.
This stems from Rule 31B, which defines how the value of taxable gaming transactions should be calculated. Platforms had assumed these credits funded by the company and often non-withdrawable were not taxable, as they were part of marketing and user acquisition strategies.
